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500 Part 5 • Controlling
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CasE applICatION 3
Stirring Things Up
he steaming cup of coffee placed in a customer’s hand for her employees to be more efficient with simple things like
at any Starbucks store location starts as coffee beans keeping items in the same place, moving drink toppings closer
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T(berries) plucked from fields of coffee plants. From to where drinks are handed to customers, and altering the or-
harvest to storage to roasting to retail to cup, Starbucks under- der of assembly. After two months under the new methods, her
stands the important role each value chain participant plays. store experienced a 10 percent increase in transactions.
Starbucks offers a selection of coffees from around the Another thing that Schultz did that was quite unprec-
world, and its coffee buyers personally travel to the coffee- edented was to close every one of its stores for three hours on
growing regions of Latin America, Africa/Arabia, and Asia/ one Tuesday evening to train ALL of their over 135,000 baris-
Pacific to select and purchase the highest-quality arabica tas (a barista is a person who prepares and serves espresso-
beans. Once the beans arrive based coffee drinks). During
at any one of its six roast- that training, baristas were re-
ing facilities (in Washington, Starbucks Value Chain: From minded that they played an
Pennsylvania, Nevada, Bean to Cup to You important role in creating not
South Carolina, Georgia, or only a fabulous product but a
Amsterdam), Starbucks’ mas- fabulous customer experience.
ter professional roasters do their “magic” in creating the com- Despite warnings that closing the stores would be a public rela-
pany’s rich signature roast coffees. There are many potential tions nightmare and a financial mistake, the decision seemed to
challenges in “transforming” the raw material into the quality be a sound one. In the weeks following the retraining, quality
product and experience that customers expect at Starbucks— scores for the company’s beverages went up and stayed there.
weather, shipping and logistics, technology, political instabil-
ity, and so forth. All could potentially affect the company. Discussion Questions
Although those operations management challenges are sig-
nificant, the most challenging issue facing Starbucks today is 1525 Would you describe production/operations technology in
balancing its vision of the uniquely Starbucks’ coffee experi- Starbucks retail stores as unit, mass, or process? Explain your
choice. (Hint: You may need to review this material found in
ence with the realities of selling a $4 latte in today’s world. Chapter 6.) How does its production/operations technology
Starbucks products have become an unaffordable luxury for approach affect the way products are produced?
many. As revenues and profits declined during the economic 1526 What uncertainties does Starbucks face in its value chain?
downturn, CEO Howard Schultz realized that Starbucks had Can Starbucks manage those uncertainties? If so, how? If not,
to evaluate everything about how the company operated and to why not?
make changes where needed. Although it built its business as 1527 Go to the company’s Web site at www.starbucks.com and
“the anti-fast-food joint,” the recession and growing competi- find the information on the company’s environmental activi-
tion forced Starbucks to become more streamlined. Under one ties from bean to cup. Select one of the steps in the chain (or
new initiative put into effect at its U.S. stores, employee time your professor may assign one). Describe what environmental
actions it’s taking. How might these affect the way Starbucks
wasters such as bending over to scoop coffee from below the “produces” its products?
counter, idly standing by waiting for expired coffee to drain, 1528 Research the concept of lean organizations. What benefits
or dawdling at the pastry case were discouraged. Instead, does “lean” offer? How might a business like Starbucks
employees were to keep busy doing something, such as help- further utilize the concepts of being lean?
ing customers or cleaning. At one of the first stores to imple- 1529 What lessons could other organizations learn from Starbucks’
ment the “lean” techniques, the store manager looked for ways actions?
